Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

The provision for income taxes consists of the following:



	Year Ended December 31,
	2017			2016			2015
	(Dollars in millions)
Current
Federal income tax	$	(6.2	)	$	0.4		$	0.7
State and local income tax	(0.2		)	(0.4		)	4.9
Foreign income tax	38.8			34.9			27.4
Subtotal	32.4			34.9			33.0
Deferred
Federal income tax	106.2			(9.8		)	(36.7		)
State and local income tax	(2.7		)	(1.3		)	(2.6		)
Foreign income tax	(11.0		)	6.2			8.4
Subtotal	92.5			(4.9		)	(30.9		)
Total provision for income taxes	$	124.9		$	30.0		$	2.1

A summary of the tax effects of the temporary differences is as follows:



	As of December 31,
	2017			2016
	(Dollars in millions)
Deferred tax assets
Federal foreign tax credit	$	11.9		$	12.8
Federal net operating loss carry forward	22.8			12.1
State net operating loss carry forwards	11.8			4.3
Tax basis goodwill and intangibles	98.2			149.8
Depreciation and amortization	16.6			25.3
Deferred restricted common unit compensation	9.4			12.1
Accrued compensation	31.0			25.0
Basis difference in investments	24.4			34.0
Other	24.3			25.5
Deferred tax assets before valuation allowance	250.4			300.9
Valuation allowance	(27.3		)	(21.8		)
Total deferred tax assets	$	223.1		$	279.1
Deferred tax liabilities ⁽¹⁾
Intangible assets	$	4.8		$	5.5
Unrealized appreciation on investments	121.0			111.0
Other	2.5			4.8
Total deferred tax liabilities	$	128.3		$	121.3
Net deferred tax assets (liabilities)	$	94.8		$	157.8


(1)	As of December 31, 2017 and 2016, $52.7 million and $44.7 million, respectively, of deferred tax liabilities were offset and presented as a single deferred tax asset amount on the Partnership’s balance sheet as these deferred tax assets and liabilities relate to the same jurisdiction.

The following table reconciles the provision for income taxes to the U.S. Federal statutory tax rate:



	Year Ended December 31,
	2017		2016		2015
Statutory U.S. federal income tax rate	35.00	%	35.00	%	35.00	%
Income passed through to common unitholders and non-controlling interest holders⁽¹⁾	(31.55	)%	(40.00	)%	(40.64	)%
Reduction in U.S. corporate tax rate	7.77	%	—	%	—	%
Unvested Carlyle Holdings partnership units and other compensation	1.45	%	36.74	%	1.87	%
Foreign income taxes	0.12	%	28.75	%	1.61	%
State and local income taxes	(0.19	)%	(6.70	)%	4.13	%
Valuation allowance impacting provision for income taxes	0.07	%	16.84	%	(3.88	)%
Other adjustments	(1.64	)%	(4.40	)%	2.43	%
Effective income tax rate⁽²⁾	11.03	%	66.23	%	0.52	%


(1)	The Partnership is organized as a series of pass through entities pursuant to the United States Internal Revenue Code. As such, the Partnership is not responsible for the tax liability due on certain income earned during the year. Such income is taxed at the unitholder and non-controlling interest holder level, and any income tax is the responsibility of the unitholders and is paid at that level.


(2)	The effective income tax rate is calculated on income before provision for income taxes. The effective tax rate is impacted by a variety of factors, including, but not limited to, changes in the sources of income or loss during the period and whether such income or loss is attributable to the Partnership's taxable subsidiaries.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of penalties and interest, is as follows:



	As of December 31,
	2017			2016			2015
	(Dollars in millions)
Balance at January 1	$	13.0		$	13.1		$	13.8
Additions for tax positions of prior years	1.6			1.3			(0.7		)
Reductions due to lapse of statute of limitations	(5.7		)	(1.4		)	—
Balance at December 31	$	8.9		$	13.0		$	13.1